Raízen filed this Wednesday (11) a mechanism used by companies to renegotiate debts with creditors outside of a traditional judicial recovery. The company wants to restructure around R$65.1 billion in financial debts without real guarantees, in addition to credits between companies within the group itself.
The company has already presented the general structure of the proposal, but still left open important parts of the details that will define how this restructuring will be carried out in practice.
See below what is already known about the restructuring plan, and what will still need to be negotiated with creditors.
What is already known
Raízen has already informed the main paths it intends to use to try to reorganize the debt:
- capital contributionthat is, the entry of new money into the company by shareholders or other investors;
- debt-to-equity conversionwhen the creditor agrees to exchange the amount he would receive for a stake in the company;
- exchange of current debt for new bondsthat is, replacement of old debts with new debts with different terms and conditions;
- corporate reorganizationwhich may include changes to the structure of group companies;
- sale of assetssuch as businesses, operations or interests that can generate cash.
The company also reported that it has already obtained initial compliance for more than 47% of the debts included in the process and that it will have up to 90 days, from the formal progress of the request, to seek the necessary support to approve, or judicially validate, the final plan.
For lawyer Fernando Tardioli, this type of still incomplete design is expected in operations of this size. “This process goes through sensitive negotiations, which involve conditions such as grace periods, possible discounts, payment terms and interest rates”, he states.
Continues after advertising
In other words, points such as how long the company will have before paying again, how much of the debt can be reduced and what interest will be charged still need to be discussed. According to him, in cases with many creditors and different interests, achieving the level of adhesion required by law can be a relevant challenge.
What is still open
Although Raízen has already shown which instruments it intends to use, several points have not yet been defined and must be negotiated with creditors. After that, the company must present an “Updated Plan”, that is, a new version of the plan with more details.
Among the main points still open are:
Continues after advertising
- new debts: the company has not yet detailed how much new debt it intends to issue, what the interest will be, the payment deadlines and whether there will be guarantees;
- contribution and conversion into shares: it still remains to be defined how much new money can come in, how much of the debt can become a stake in the company and under what conditions this would happen;
- sale or separation of assets: the company has signaled that it may sell assets or separate parts of the business, but has not yet said which ones;
- changes in the group’s structure: the plan mentions possibilities such as mergers, spin-offs or incorporations, which are ways of reorganizing companies in the same group, but without yet presenting a closed design;
- creditors’ support for the final plan: the definitive version will still need to be analyzed by creditors, who will have to formally agree with it.
In practice, this means that Raízen has already presented the restructuring framework, but has not yet finalized the central conditions that will show how much the solution will cost, who will have to give up more and how the company intends to reorganize its business.
The market also sees a solution built on several fronts at the same time, since, as Bradesco BBI summarizes, Raízen’s situation is critical and “there is no silver bullet”.
Behind the scenes, Raízen’s negotiations with creditors had been taking place for months and revolved around three main axes: how much new money shareholders would put into the company, how much of the debt could be converted into equity and whether the restructuring would involve the sale or separation of assets.
Continues after advertising
According to a report from Reuterscreditors pressed for a more robust contribution from partners, while a proposal to split the company faced resistance from debt holders. In this process, Shell gained a leading role in the negotiations, willing to lead a contribution of R$3.5 billion, while Cosan had a more limited participation in the final discussions on the solution.
